Tag Archives: London Market

Many companies and organisations face mass tort and complex liabilities that can negatively impact their financial outlook. Allegations surrounding these types of liabilities can span decades and include the following types of “long-tail” exposures:

Asbestos;

Construction defect;

Welding fumes;

Pollution;

Medical devices/pharmaceuticals;

Product liabilities;

Sexual misconduct; and

Other legacy claims.

A company’s historic occurrence-based liability insurance policies can protect it from the economic impact of these claims. Yet many companies are unable to locate their historic policies or other insurance records that could prove the existence of this valuable coverage. The ability to locate historical coverages is critically important as U.S. courts generally place the burden of proving the existence of the policies on the policyholder.

The Value of Historic Insurance

Historic insurance assets dating back 60 or more years can provide significant protection against today’s burdensome claim and defence costs. The combined limits of a historic insurance portfolio can total hundreds of millions of dollars of viable coverage. Furthermore, historic policies often contain broader coverage including:

Lack of key exclusions, such as asbestos and pollution;

Lower deductibles;

Absence of aggregate limits for certain exposures; and

Defence costs in addition to the limits of liability.

The value of these historic assets can, however, be diminished by insurer runoff and insolvency issues. Therefore, companies with existing or potential long-tail liabilities should ensure that they take the opportunity to recover and retain these valuable assets now.

Can You Locate Your Historic Insurance Coverage?

Due to age of these documents, companies all too often find they are unable to locate the coverage they need. Company mergers and broker changes compound this inability. Files are moved and forgotten, and personnel with crucial institutional knowledge retire or relocate.

Marsh Risk Consulting’s (MRC) Mass Tort and Complex Liability Practice has a dedicated, global insurance archaeology practice that can assist companies in locating lost policies. Working in close collaboration with clients, our experienced insurance archaeologists can locate historical insurance assets through comprehensive research in a number of areas, including:

Research and internal reviews of historic corporate records and archives;

Interviews with current and former personnel such as risk managers, corporate counsel, and records managers;

Research and contact with former brokers, including detailed interviews with brokerage personnel who may have knowledge about a particular account;

Identification and contact with various outside sources, including law firms, government entities, and accounting firms that may have retained important evidence of insurance;

Contact with insurers to coordinate research for additional policy documentation; and

Specimen policy form research to locate standard terms and conditions for policies supported only through secondary evidence.

London Insurance-Market Archeology

For the past hundred years Lloyd’s and London insurers have been major providers of insurance coverage to the commercial world. Since 1988, our London team has been offering a full range of London insurance-market archaeology services. The unit has direct access to the largest broker archive in the London market with records dating back to the 1940s. The team has extensive contacts with other London insurers and insurance brokers to provide a comprehensive research service. Furthermore, our extensive contacts in the London insurance market can provide clients with expert guidance regarding London insurer insolvencies and solvent insurer schemes of arrangement.

Getting Started

Prior to any research project, our archaeologists will contact or meet with you to thoroughly discuss the scope of the project, determine coverage gaps, obtain additional information on the history of any pertinent companies (including predecessors,) and determine what research steps may have already been undertaken. After completing these initial steps, our archaeology team will provide a comprehensive proposal detailing specific research steps to find lost policies.

The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation, and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. Marsh cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk.

Claims Services and Consultancy

Claims processing
Via our parent company Marsh we have access to claims handlers who regularly deal with claims across all the major disciplines of insurance, and we can offer advice regarding all aspects of claims handling.

Specialists in long-tail claims settlements
Our parent company Marsh is one of the market leaders in the handling of long-tail claims. We have developed some unique services in this field, which, together with our in-depth specialist knowledge, will reduce your balance-sheet liabilities and enable you to outsource an administrative burden. We provide expertise in all types of long-tail claims, and specialize in asbestos, pollution and health hazard (APH) matters.

Understanding insurance and the insurance market
Claims handlers provide advice on policy wordings, clauses and conditions. We have a detailed understanding of the insurance market, particularly in London, and have developed a close working relationship with all the major London insurers.

Arranging negotiated settlements and policy buy-backs
InSolutions can provide clients with access to specialized services specifically geared toward settling their APH claims by negotiation rather than by expensive and protracted litigation. Our aim is to concentrate on the business and economic considerations that apply rather than the purely legal aspects, and we anticipate finalizing an agreed settlement in under two years.

Non broker of record claims
We can service entire claims portfolios, including claims on policies that were originally placed by other broking houses. As well as simplifying and accelerating the claims procedure by using a “one-stop shop” approach, this will reduce your costs and give you the distinct benefit of sole broker involvement.

In today’s global economy, international companies can face challenging historic claims issues emanating from operations in a number of countries most notably the United States. In many instances, corporations face unexpected claims activities from mergers and acquisitions of US companies.

In order to assist companies in locating historic insurance coverage that could respond to US and Canadian exposures, Marsh’s US Mass Tort and Complex Claim practice group has established an insurance archaeology unit. This unit is headed by Suzanna Yorgey. Since historic insurance programs for most North American companies have a combination of Lloyd’s and US domestic insurance coverage, our US insurance archaeology practice is fully coordinated and integrated with any research undertaken by InSolutions.

Whereas research of Lloyd’s and London market records is concentrated on archive broker records, US archaeology can encompass a wider variety of research areas. Depending on the scope and nature of any particular project, this research could include the following:

Research and internal reviews of client documents and business records

Oral history interviews with current and former personnel

Research and contact with former brokers, including research and review of Marsh’s extensive legacy broker records

Identification and contact with various outside sources, including Law firms and insurance certificate holders

Research of government records, including research of Department of Defence contracts requiring documentation of insurance

Contact with known carriers to coordinate research for additional policy documentation

The types of pertinent documents unearthed by an insurance archaeology project can vary significantly from a full set of complete original insurance policies to various types of secondary evidence such as correspondence, claims files, and insurance accounting records. Policies for which only secondary evidence is available can be supported through specimens and standard policy form research.

In addition to insurance archaeology, Marsh’s Mass Tort practice group can assist in the following areas:

Claims Advocacy and carrier negotiation

Policy analysis and policy preservation

Electronic claims notification

InSolutions, the London arm of Marsh Mass Tort, was approached in late 2006 by a major east coast insurer concerning one of their stable of commercial carriers, who was heavily exposed to a class action dating back to the early 1950s. They had written the primary coverage for the entity and then purchased London market reinsurance underwritten 100% by Lloyd’s. These placements were via a binding authority issued by Lloyd’s to a US surplus lines broker.

The potential liability for the carrier ran into the hundreds of millions of dollars. They had approached Equitas (now Resolute) the pre 1992 legacy Lloyd’s insurer and had been informed the binding authority that they had two certificates for never wrote reinsurance. The other problem the company faced was that they only had evidence of three years of coverage.

The InSolutions offering

InSolutions was able to identify the binding authority as being placed by one of the London brokers that Marsh now own. By analysing the manual records, InSolutions identified additional supporting material for the client within the 80 plus miles of filing stored at the Marsh Norwich UK archive facility. We were able to expand the period of coverage from three to fourteen years.

The data located included:

The market slips showing the Lloyd’s syndicates for the years the client purchased reinsurance

A number of premium transfer slips showing that Lloyd’s received the premium

Placing ledger books showing the certificates issued by the US broker

Correspondence files relating to the placement of the binding authority in which reinsurance

placements were discussed and the leading underwriter agreed a memorandum on their handling

Evidence in the correspondence of an early 1960’s claim relating to the reinsurance placed on behalf of our client.

Using our network of connections, we were also able to locate a senior retired broking director from the London broker in question. They were able to assist the client in their review of the evidence and explain how the binder was placed.

Result

Due to the additional data supplied, the London market has now accepted the binder wrote facultative reinsurance and agreed to open negotiations on a settlement with the US carrier and their external counsel.

InSolutions continues to support the carrier and their counsel as specialists in London legacy insurance records, market practice and expert location.

Many companies in the UK are facing historic Employers Liability (EL) claims often driven by asbestos claims. Due to age of these claims and the diversified nature of many companies they are unable to trace their historic EL policies.

Can you locate your historic insurance coverage?

Due to the age of these documents, companies all too often find they are unable to trace the coverage they need. Company mergers and broker changes compound this inability. The net result is files are moved and forgotten, and personnel with crucial institutional knowledge retire or relocate.

Insurance archaeology and legacy research service Marsh Risk Consulting Insurance archaeology and legacy research service Marsh Risk Consulting InSolutions, Marsh’s dedicated insurance archaeology practice, can assist companies in locating lost policies. Working in close collaboration with clients, our experienced archaeologists can locate historical insurance assets through comprehensive research in areas such as:

Research and internal reviews of historic corporate records and archives

Interviews with current and former personnel such as risk managers, finance directors, and corporate counsel

Site visits to review clients archives

Research and contact with former brokers and insurers

Identification and contact with various outside sources such as government entities, local records offices and accounting firms.

Getting started

Prior to any research project our archaeologists will contact or meet with you to thoroughly discuss the scope of the project, determine coverage gaps, obtain additional information on the history of any pertinent companies (including predecessors) and determine what research may have already been undertaken. After completing these initial steps, our archaeology team will provide a comprehensive proposal detailing specific research steps to find lost policies.

Case study 1

Our client, a publishing house, had acquired another publishing company and then received a number of legacy employers’ liability claims for printing works that it was not aware of via this acquisition.

InSolutions reviewed the claims papers and was able to:

Redirect a number of the claims as the printing works in question had previously been sold to a third party

Locate the (EL) insurance for the balance of the claims for the majority of the period in question

Due to our assistance, the client has been able to redirect these claims to third party owners or to the relevant legacy insurance carrier thus potentially saving hundreds of thousands of pounds.

Case study 2

Our client purchased a regional tyre and exhaust chain. The profit margin was around 11% per annum, claims ratios were low, and there is an acceptable level of staff turnover.

After the purchase, they received a number of legacy claims and InSolutions was asked to trace the insurance history.

We found:

Eight sites which had previously been owned by a tyre company, which in turn bought four of these businesses from garage owners, one from a timber merchant, and two others from a supplier of coal and central heating oil

For the sites the vendors had assumed the past liabilities of 14 companies ranging from an assortment of businesses, with the majority of the businesses being potential producers of asbestos related claims

Aside from having to trace 14 separate insurance histories for the client we suggested that they arrange underground surveys of all sites.

Of the 17 sites they owned, eight showed that underground oil storage tanks were still in situ, with three such tanks near a local river. The cost of removal of the tanks was estimated at £2 million.

Fortunately, through InSolutions the client now has EL coverage back to the 1960s and public liability cover for some of these companies.